A Methanex methanol plant in Chile.
Inside the Market's roundup of some of today's key analyst actions. This file will be updated during the trading day. For breaking analyst actions prior to market open every day, read our Before the Bell morning report.
At least two analysts have reiterated their ratings and price targets on Enbridge Inc. after a federal panel Thursday recommended the the Northern Gateway pipeline proceed, commenting that the project is still too speculative to include in their forward financial estimates.
CIBC World Markets analyst Paul Lechem maintained a "sector outperform" rating and $51 (Canadian) price target. Canaccord Genuity analyst Juan Plessis kept his $50 target and "buy" rating.
"We view the JRP (Joint Review Panel) ruling as positive for Northern Gateway," said Mr. Lechem. "However, the biggest obstacle remains potential legal challenges regarding unsettled land claims with Aboriginal groups in B.C. We have not included Northern Gateway in our estimates."
"While the Northern Gateway project appears to be of sufficient scale to contribute to Enbridge's future earnings and cash flow at a revised estimate of $7.885 billion (up from $6.5 billion originally), investors should recognize that if completed, it could potentially add around $0.05-0.10 to annual EPS and should not materially impact the company's growth profile," said Canaccord's Mr. Plessis.
"We believe there is still a lot of work ahead on the Northern Gateway project before a final investment decision is made. We do not factor into our valuation of Enbridge shares any potential value of the pipeline project and await greater clarity on the fate of the project. However, we do point to potential valuation upside as additional Northern Gateway project milestones are achieved," he added.
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Raymond James initiated coverage on Legacy Oil & Gas Inc. with an "outperform" rating and $8 (Canadian) price target, believing the stock is "well priced" for investors at current levels.
"We believe 2014 will be another year that the company focuses on showing organic growth," analyst Luc Mageau said in a research note. "The stock trades at a discount - partly due to higher leverage ratios - and we expect the company to post a y/y annual growth rate of about 10 per cent while keeping leverage ratios approximately the same. Based on this, we have used a valuation multiple on the lower end of the historic trading range."
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Raymond James analyst Steve Hansen upgraded Methanex Corp. to "outperform" from "market perform," citing the recent pullback in its share price and recent developments that have restricted global supplies of methanol.
"Methanol's global supply base remains severely handicapped, plagued by a series of extended supply outages in key production regions (i.e. SE Asia, Middle East)," Mr. Hansen commented. "News this week that Iran's largest methanol units have also been shut-in (about 4.5 million tons per year) due to frigid winter conditions and associated gas shortages only exacerbates this situation, in our view."
He maintained a $68 (U.S.) price target.
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In other analyst actions:
Credit Suisse initiated coverage on Brookfield Residential Properties with an "outperform" rating and $27 (U.S.) price target.
CIBC World Markets cut its price target on Martinrea International to $13.50 (Canadian) from $15 and maintained a "sector outperformer" rating.
Stonecap Securities slashed its price target on Aurcana to 50 cents (Canadian) from $1.50 and maintained an "underperform" rating after the company announced it is placing its Shafter mine on care and maintenance. RBC Dominion Securities cut its target to 65 cents from $1.50 and maintained an "underperform - speculative risk" rating.
RBC Dominion Securities cut its price target on Argent Energy Trust to $10 (Canadian) from $10.50 and maintained an "outperform - speculative risk" rating.
JPMorgan upgraded 3M to "neutral" from "underweight" and raised its price target to $128 (U.S.) from $120.
Credit Suisse upgraded Carnival to "outperform" from "neutral" and raised its price target to $43 (U.S.) from $30.
Credit Suisse raised its price target on Worthington Industries to $43 (U.S.) from $30 and maintained a "neutral" rating.
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For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities